@amitvohra
Regards Glenmark… i don’t track it. But currently there seem to be a lot of opportunities in Pharma.
With Everest kanto the logic is simple. A black swan event has led to them struggling last few quarters. Had the company been in huge debt and with pledged shares etc i would be worried. However, they have cash in hand… minimal debt due to reduction last few years… and even in this darkest of circumstances they are able to churn out single digit profits. How i see it playing out is simple… A few more quarters of pain but with profits steadily rising to double digits by mid FY24 as cng prices drop. We all saw what they could do with cng prices at their normal levels ie hitting nearly 6 eps per quarter . Minus covid revenue and add their 40 percent brownfield expansion and they should hit 6 to 8 eps per quarter by FY25(or FY26 to be safe). At approx 30 eps even at a PE of 6 it would be a doubler from here(could be a 3 year wait but i have nothing if not patience and the company won’t go bankrupt until then even if the bad times continue for longer than expected). Add a few optionalities ie repayment of debt/turnaround or selling of loss making subsidiaries/increase of dividend payout to 10 percent instead of 3 /cng infra increases/shift to hydrogen etc over a 3 to 5 year period and there could be chances of a rerating too. Regards CG i went through the few allegations online + the everest thread and I’m comfortable. The reemergence of concalls(though not too great ones) and the fact they still own 67 percent of the company gives some comfort and shows that they are trying to get things back on track. Barring another black swan event we are currently at business bottom at near book value and it seems the ideal time to buy. I would never buy a business like this when things are going well and when the share price is rising and only good news ahead since there isn’t much of a moat and there are a lot of factors on the outside that affect it. But at present scenario the opportunity just looks very ripe to me. Im fully expecting the price to fall further(low 70s seems all but guaranteed… if it breaks below 60 and the overall situation is similar to today maybe there’ll something under the hood we don’t know and then id be a bit worried and i won’t add below that price) considering results + poor expected q4 but that will only increase the MOS with my future tranches(1 done… 1 near low 70s… none below 60… add remaining 3 as things improve and price near book value)
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